Markets that are hovering near new highs typically provide some interesting action. That was not the case Monday. The action was sloppy and random and there was a slight pop into the close to push the S&P 500 just slightly into the green. Small caps lagged and there was no meaningful sector leadership.
Breadth was mediocre with 3,200 gainers to 4,200 decliners, but Apple (AAPL) had a positive day and that offsets weakness in thousands of small cap stocks. One of the major themes lately has been a smaller group of big caps holding up the market, while stock picking has been quite challenging. As I've mentioned, my cash levels are quite high, not because I'm bearish, but because it is tough to find appealing technical setups.
Although the bears continue to whine and moan about a slew of big picture negatives there is nothing wrong with the technical health of the indexes. They are a bit extended and in need of a rest, but the action we had Monday serves that purpose.
Many old-timers that traded back in 2000 and 2007 miss the strong emotions that existed when stocks were trading at highs. There is no feeling of euphoria, which is probably a big part of the reason that the indexes continue to trend slowly higher. The dominance of computer algorithms and ETFs make it unlikely we will ever see the sort of emotions that we had years ago and they also make it even harder to try to predict market turns. Market action like this is very supportive of one-way action with minimal pullbacks.
The character of the market remains unchanged and that makes trading less interesting, but our job is to navigate the action rather than wish for something different.
Have a good evening. I'll see you Tuesday.